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Shell Corporations....What are they good for...absolutely nothing. (Original Post) safeinOhio Jan 2019 OP
you answered your own question of what they are good for....and why they remain untouchable beachbum bob Jan 2019 #1
I've asked some business types the same question. safeinOhio Jan 2019 #2
Say it again! Poiuyt Jan 2019 #3
OK safeinOhio Jan 2019 #4
our business creates what could technically be called "shell companies" all the time. unblock Jan 2019 #5
So, legalized fraud? Wounded Bear Jan 2019 #6
nothing fraudulent about it. who is being deceived in this? unblock Jan 2019 #7
Used to hide assets from spouses, they get hurt... safeinOhio Jan 2019 #8
like i said, they can be used for illegitimate purposes. unblock Jan 2019 #10
Alot of people don't understand corporate structuring fescuerescue Jan 2019 #9
yes, exactly! thanks! unblock Jan 2019 #11

safeinOhio

(32,531 posts)
2. I've asked some business types the same question.
Tue Jan 22, 2019, 10:08 AM
Jan 2019

They go on and on and never really answer my question. That says a lot to silly old me.

unblock

(51,974 posts)
5. our business creates what could technically be called "shell companies" all the time.
Tue Jan 22, 2019, 10:53 AM
Jan 2019

it has perfectly legitimate uses, although, like many things, it could also be done for illegitimate reasons as well.

we use them to help companies effectively borrow money against assets.

a lender might be unwilling to lend to the company directly due to concerns about the company going bankrupt. or they may be willing to lend, but only at a very high interest rate. yet, the company has some reliable assets to offer as collateral.

to solve this problem, we create a shell company, typically called a "special-purpose entity". the reliable assets are sold to the shell company and the lender can then lend to that shell company. the shell company has no employees.

the lender is willing because the shell company is designed to not get sucked into any bankruptcy of the actual company.

Wounded Bear

(58,440 posts)
6. So, legalized fraud?
Tue Jan 22, 2019, 10:57 AM
Jan 2019


California has been using that kind of shit for years to get around Prop 13 taxes.

unblock

(51,974 posts)
7. nothing fraudulent about it. who is being deceived in this?
Tue Jan 22, 2019, 11:01 AM
Jan 2019

the only people who lose out in a bankruptcy is the other creditors who don't get the benefit of those assets that can't be sucked into the bankruptcy -- but those other creditors have to approve the whole arrangement in the first place, or it doesn't happen.

and usually, they are happy to permit it, because the arrangement improves their own chances of getting paid out in full, and the chances of the company avoiding bankruptcy altogether.

safeinOhio

(32,531 posts)
8. Used to hide assets from spouses, they get hurt...
Tue Jan 22, 2019, 01:14 PM
Jan 2019

Used to avoid taxes, so we have to pay more.

trump has over 500 of them and that says it all.

unblock

(51,974 posts)
10. like i said, they can be used for illegitimate purposes.
Tue Jan 22, 2019, 01:26 PM
Jan 2019

i'm just saying they also can be used for perfectly reasonable purposes as well.

simply banning them isn't a good solution, at least not without finding some way to preserve the legitimate uses.

fescuerescue

(4,448 posts)
9. Alot of people don't understand corporate structuring
Tue Jan 22, 2019, 01:23 PM
Jan 2019

They get all weirded out by the term corporate and assume that it's just everyone who works there is evil.

Fact is, our tax structure and liability laws practically require them.

If people were hemmed in and couldn't take risks with a portion of their money, we would be a third world country right now.

Imagine if funders of Google didn't get involved, because they were afraid of risking ALL the money their great-great-great grandfather earned.

unblock

(51,974 posts)
11. yes, exactly! thanks!
Tue Jan 22, 2019, 01:34 PM
Jan 2019

there are certainly plenty of businesses and individuals and corporate structures that do illegal or immoral things. these are usually the ones that make the news.

but it doesn't mean that every business is evil, nor every corporate structure.

i believe in regulation and enforcement to reduce and deter the inappropriate uses, but i believe in making them available for legitimate uses.

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